# Securitisation

**Securitisation Pools** are designed for pooling together a group of underlying loans or receivables and distributing the incoming cashflows from those assets to investors based on a tiered structure.

Unlike Term Loan Pools, these do not follow a fixed repayment schedule. Instead, repayments to investors depend entirely on **actual collections** from the asset pool — including principal repayments, interest payments, early repayments, or recoveries from defaults.

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**Key Features:**

* **Cashflow-Driven Repayments**\
  Instead of following a fixed repayment schedule, repayments in these pools are made as cash is received — whether from interest, principal repayments, prepayments, or recoveries. This makes them suitable for portfolios where cashflows are variable or seasonal.
* **Tranche-Based Investment Structure**\
  These pools are always **multi-tranched**, starting with:
  * **Senior Tranche**: Receives repayments first and is more protected from losses.
  * **Junior Tranche**: Paid after senior obligations are met and absorbs losses first, offering potentially higher returns.
* **Flexible Waterfall Distribution**\
  The distribution of cashflows between tranches follows a predefined **waterfall mechanism**, which governs who gets paid, when, and how much:
  * **Sequential Waterfall**: All interest and principal payments go to the Senior tranche until it’s fully paid; only then does the Junior tranche start receiving distributions.
  * **Pro-Rata Waterfall**: Interest is shared proportionally between tranches, while principal is still prioritized to Senior first.

This structure offers investors the ability to choose between **lower-risk, stable** returns (Senior) or **higher-risk, higher-reward** positions (Junior), depending on their risk appetite.